Is a plan-termination amendment needed if a plan ends by paying the last benefit?

[Peter Gulia]

Many BenefitsLink discussions remark on a need for a plan-termination amendment to make a plan that has been relying on a remedial-amendment period and interim amendments “up to Code” as of the moment the plan is terminated.

Imagine this situation: A one-participant plan was established and is maintained, with the plan sponsor having adopted all interim amendments the recordkeeper presented. The participant died. Of two designated beneficiaries, one claimed her death benefit and was paid. Now, the other beneficiary is getting ready to claim his death benefit.

What if the plan pays that last beneficiary not because the plan sponsor decided the plan’s termination but because the plan’s administrator finds that the beneficiary is entitled to his death benefit?

If the plan sponsor does not amend the plan, would the plan’s distribution to the last remaining beneficiary be a distribution from a tax-qualified plan?